Greens want loans tied to cash rate moves

The Australian Greens will be seeking backing from the federal parliament to make retail banks offer mortgages and small business loans that are linked directly to movements in the official cash rate.

The proposal comes after something of a stand-off by the big four banks after the Reserve Bank of Australia (RBA) cut the cash rate on Tuesday.

It was broken by the ANZ Bank on Thursday when it announced it would be pass on the full reduction to mortgages and small business loans.

The other major banks - Commonwealth Bank of Australia, National Australia Bank and Westpac - have yet to announce their intentions.

"Banks should be required to offer mortgages and small business loans that only go up and down when the Reserve Bank changes its interest rate," Greens banking spokesman Adam Bandt said in statement on Thursday.

"By requiring the banks to pass on any Reserve Bank rate cut in full, and by capping any rise at the same amount set by the RBA, we will limit excessive profiteering and ensure Australians get a better deal."

These products are sometimes known as 'tracker' loans and are already offered by some banks in Australia, such as Queensland QT Mutual Bank, and in other countries.

The Greens want to make every bank offer them, so that customers can choose this kind of loan if they want to be sure they will get the benefit of any rate cut in full.

Mr Bandt said if smaller banks can offer tracker mortgages, the big four should be able to as well.

"Banks are quick to use the RBA rate to justify interest rate increases, but go slow when there is a rate cut," he said.

The MP said banks did not just exist to make a profit, they also social obligations that should be met.